Progress Press defrauded of millions by two of its own directors and Keith Schembri
In the compilation of evidence against former OPM chief of staff Keith Schembri, the court hears how the purchase of printing machinery by Progress Press was a classic case of bribery and money laundering • Matthew Pace and Lorraine Falzon from Zenith get bail
Progress Press ended paying $6.5 million extra for printing machines with the money shared between Keith Schembri, Malcolm Scerri and Allied Group directors Adrian Hillman and Vince Buhagiar.
Court testimony given by Inspector Joseph Xerri from the police anti-money laundering unit detailed a complex web of payments made through offshore companies through which the four men benefitted from the profit at the expense of the company.
“What should have been a relatively simple transaction became a convoluted series of transactions intended to hide commissions... coordinated by the same people who were involved in the deal,” the inspector testified.
The inspector was testifying in the compilation of evidence against Keith Schembri, his father Alfio Schembri, business partner Malcolm Scerri and Kasco Group financial controller Robert Zammit. One of the cases under consideration was the purchase of printing machinery by the Allied Group from Kasco for the new Mrieħel printing press.
Hillman’s offshore company Lester Holdings received US$125,000 from Kasco Egineering, plus a further $100,000. Buhagiar received €50,000 from Malmos, another offshore company, into his MFSP account.
MFSP director Matthew Pace had emailed Nexia BT’s Brian Tonna to show that this payment was for consultancy. The documents were fabricated, the inspector said, because there was no consultancy.
Hillman and Buhagiar had travelled to Brussels with Schembri, Scerri and others to view the printing machines when the company decided to invest in new equipment. Allied, which publishes the Times of Malta newspaper, transferred its operations from Valletta to Mrieħel. The printing press that cost millions to purchase has since been shut.
Xerri testified in court that investigators had found a spreadsheet prepared by Schembri on servers at Kasco, which detailed how the profit from the deal was to be split between himself, his business partner Malcolm Scerri, Buhagiar and Hillman.
“Progress Press paid $6.5 million more than it should have,” the inspector said.
He briefly testified behind closed doors but then continued in open court.
The inspector said the police believe Keith Schembri paid out a total of $5.5 million in backhanders. "Experts had described the organisation as a professional money laundering operation," Xerri said.
"On a prima facie, basis it emerged that Brian Tonna, Karl Cini and Matthew Pace, had played a role in preparing the false documents," he continued.
Bail was not requested today since the defence wants to cross-examine the two inspectors on Monday.
Earlier, the court granted bail to Zenith Finance's Matthew Pace and Lorraine Falzon, who appeared on the same case yesterday. The court imposed strict conditions, including that they do not approach any airfield and stay at least 10m away from the coast.
Background
On Saturday, Schembri was charged together with his elderly father Alfio Schembri, a director of several of the Kasco companies, and business partner Malcolm Scerri and financial controller Robert Zammit.
Schembri was charged with corruption and giving false testimony. He was also accused of forgery.
He was denied bail and taken to the Corradino Correctional Facility.
READ MORE: Keith Schembri and 10 others charged with corruption, fraud, money laundering